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Home / Business / Dow soars 300 points on shutdown and oil deals

Dow soars 300 points on shutdown and oil deals



The Dow climbed a good 405 points on Tuesday after politicians in the US tentatively agreed a plan to avoid another government arrest. The actions also took a boost after Saudi Arabia decided to cut oil production. The NASDAQ and the wider S & P 500 rose by 1.4%.
Congress negotiators said that Monday they reached an agreement in principle to avoid a partial closure of the government at the end of this week. The agreement will not be final until Congress approves it and President Donald Trump will sign it, leaving plenty of room for new development to bury the deal. But Wall Street was optimistic that American lawmakers would have avoided another crisis.

"Markets detest uncertainty, so this is spectacular news that removes one of the biggest obstacles to US economic growth and prosperity and better financial market conditions," said Chris Rupkey, chief financial economist at the MUFG.

The last 5-week arrest, which ended last month, cost the US $ 1
1 billion – $ 3 billion of which the economy will never recover, according to the # 39; Congress office. This is not a big deal for the US economy by nearly $ 20 trillion. But that level of political intransigence has made Wall Street worried about the ability of politicians to agree on something potentially much more serious: raise the ceiling of US debt.

In the coming months, legislators will have to vote to pay off the debt that America owes. Otherwise, the United States may default on debt payments. This could signal that America will not reimburse its creditors, potentially sending a shock through the US Treasury market, which the government relies on to finance its programs and offset its huge budget shortage.

The credit rating agencies have already warned that they will cut the credit rating of the United States if the legislators do not increase the debt ceiling, which would increase the amount of money the government has to pay to pay off its debts. Credit rating agencies cut America's perfect AAA rating to AA + in 2011 when the government approaches losing a debt payment.

The closing agreement offers investors the hope that politicians will not shoot once again when the stakes are potentially much higher.

Oil moves higher

OPEC, the oil cartel headed by Saudi Arabia, announced Tuesday that it would cut the production of 800,000 barrels a day. This has eased investor concerns that a global economic slowdown would continue to hurt demand and that oil producers are not doing enough to slow down production.

The price of US crude rose 2% on Tuesday to $ 53.56 a barrel.

Oil has increased in recent weeks after the United States has sanctioned Venezuela, a major supplier of crude oil all over the world. The sanctions against Iran have also supported oil prices.

But the increase in crude oil production in the United States has weighed on oil in the last year. However, oil prices could increase between 10% and 15% this year due to OPEC production cuts and sanctions, Francisco Blanch, head of global commodity research at Bank of America Merrill Lynch told Julia Chatterly about CNNi's "First Move". 19659006] Energy stocks have gathered. Hess ( HES ) and Devon Energy ( DVN ) each jumped almost 3%.


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